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Travelers to Focus its Advertising on Direct Sales to Consumers

Source: WSJ

Posted on 26 Apr 2011

Travelers Cos. is planning to change its advertising message this year as it hones its effort to sell insurance directly to consumers.

The property/casualty insurer's current campaign focuses on increasing consumer awareness of the company, but the new ads will be "more of an 'operators are standing by' type of advertising," Chief Executive Officer Jay Fishman said on a conference call with analysts and investors Thursday. "You are going to see more of a drive to action-oriented advertising."

The change comes as Travelers, which has historically sold coverage to consumers through insurance agents, works to expand sales of home and auto coverage on its website. In that effort, it trails rivals Progressive Corp. and Geico, which have offered car-insurance quotes and substantial customer-service operations on their website for years.

Travelers is studying data about the first group of customers it attracted on its website to refine its underwriting skills in the new direct-to-consumer venture. The company must learn how much it needs to charge to earn a profit while still attracting customers to switch their insurance coverage to Travelers.

"We are still in the process of learning," Fishman said. "We don't know enough about the pricing of the product. We don't yet know enough about how to convert quotes into sales at a level that's likely to produce a long-term profitable return."

The company has so far shared little information about its direct-to-consumer initiative, though first-quarter results released Thursday indicate the company is operating the project at an underwriting loss as it invests in the effort.

Allstate Corp., another home and auto insurer that has historically sold coverage only through agents, has already shifted its advertising toward direct consumers over to its website. From there, they can find a local agent who can help them arrange coverage, or get a quote on a policy.

Greg Toczydlowski, president of Travelers' consumer operations, said the company may be able to gain a leg up in sales of home insurance in the direct-to-consumer line. Compared to car insurance, home insurance has so far been a less popular product online.

"We really think that's where we have a long-term strategic competitive advantage with the breadth of our product and the strength of that property line," Toczydlowski said.